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2020 IRA Contribution Limits Remain Unchanged

IRA and money

  |  By Dimetra Pelekidis, CISP®, SDIP

In 2020, traditional and Roth IRA contribution limits will remain at $6,000 for the second year in a row. But changes are coming in the new year for IRA retirement savers when it comes to income phase-out ranges, which dictate how much of your IRA contributions you can deduct from your taxable income.

IRA contribution limits and income phase-out ranges are set annually by the IRS, which determines contribution limits based on changes in the cost of living. 2020 IRA contribution limits include an additional $1,000 catch-up contribution for investors who are aged 50 and older. This catch-up contribution remains flat from 2019.

While almost anyone can make contributions to an IRA, those contributions are not always tax deductible. IRA deductions may be reduced, phased out, or completely eliminated based on your filing status and income.

Below are the 2020 income phase-out ranges for investors who own a traditional IRA:

  • For single taxpayers who are covered by a workplace retirement plan, the 2020 phase-out range is $65,000 to $75,000. That is up from $64,000 to $74,000 in 2019.
  • For married couples who file jointly -- where the spouse making the IRA contribution is covered by a workplace retirement plan -- the phase-out range is $104,000 to $124,000. That is up from 2019’s level of $103,000 to $123,000.
  • For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $196,000 and $206,000. That has risen from 2019’s range of $193,000 to $203,000.
  • The phase-out range for a married individual filing a separate return who is covered by a workplace retirement plan remains $0 to $10,000.

Here are the 2020 income phase-out ranges for investors who own a Roth IRA:

  • The income phase-out range for singles and heads of household is $124,000 to $139,000. That is up from $122,000 to $137,000 in 2019.
  • For married couples filing jointly, the income phase-out range will be $196,000 to $206,000, which is up from $193,000 to $203,000 in 2019.
  • The Roth IRA contribution phase-out range for a married individual filing a separate return remains $0 to $10,000.

Although 2020 IRA contribution limits remain flat from 2019, making yearly contributions to your retirement account is still important to building your long-term savings. Holdings in a traditional IRA can compound year-after-year on a tax-deferred basis and can grow that way until required minimum distributions must start when an account holder turns 70½. This compounding can potentially help a small retirement nest egg become a large one over time.

To get a full list of contribution limits, you can visit PENSCO’s IRA contribution limits and deadlines page.

This Blog does not provide investment, tax, or legal advice nor does it evaluate, recommend or endorse any advisory firm or investment vehicle. Investments are not FDIC insured and are subject to risk, including the loss of principal.

PENSCO Trust Company performs the duties of an independent custodian of assets for self-directed individual and business retirement accounts and does not provide investment advice, sell investments or offer any tax or legal advice. Clients or potential clients are advised to perform their own due diligence in choosing any investment opportunity as well as selecting any professional to assist them with an investment opportunity. Alternative investments are not FDIC insured and are subject to risk, including loss of principal. Other than the Opus Affiliates, PENSCO is not affiliated with any financial professional, investment, investment sponsor, or investment, tax or legal advisor.